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Small Change

Financial advice on credit and debt from UNM finance professor Emmanuel Morales-Camargo

Emmanuel Morales-Camargo is an assistant professor at the University of New Mexico with a Ph.D. in Finance. While his teaching areas include financial institutions and systems research, before he came to our fair state last year, Professor Morales-Camargo was the educational adviser to an organization at the University of Arizona that provides free personal finance education. He is also an aspiring author of a case study book on financial literacy. We put his money mind to use, extracting valuable information about how to deal with debt.

On being overwhelmed by daunting balances:

"Everyone should be aware that if they make the minimum payment on their credit card, they are not going to get in trouble, their credit score is not going to be affected, their credit history is not going to be tainted ... They can get away with making the minimum payment for the rest of their lives. The credit card companies will be happy if they did that because they would make more money."

On not making the minimum payment:

"People say, 'I'm never going to pay this off, so I might as well give up now,' and that's a big mistake. They will actually be hunted down for the next seven to 10 years, depending on what final measures [creditors] decide to take."

On debt consolidation:

"If you go to a credit counseling agency, it'll help you consolidate your different credit cards into one. Or it'll help you negotiate with the credit card companies so that you might pay it in a reasonable amount of time. That also carries a flag in your credit report that is going to be there for seven years, because all adverse information pertaining to your credit will stay in your credit history for seven years."

On finding an honest credit counselor:

"There are some nonprofit organizations that are more liable to have independent and reliable advice, but even then, those organizations typically tend to get funding from the government, from different corporate sponsors and independence should be questioned. Look into the company, get some references and ask about its affiliations and independence. It should be able to anticipate any concerns you may have. If it gets offended by it, then it's definitely not a place to go."

On bankruptcy:

"In the extreme case, bankruptcy might be a solution, but it actually affects your credit for 10 years. Basically, that's tantamount to financial death. You're going to have problems getting a reasonable loan to buy a car, to buy a house and so forth. If you get the loan, you're going to pay a higher rate of interest."

On financial self-help books:

"For the average consumer, there are hundreds of different authors who claim to have the solutions: Do not read just one."